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£1700 Tax saving

Self-Assessment tax planning
There are two choices when a client has purchased a company vehicle in the tax period. The mileage method where the client would claim a mileage expense for the number of miles travelled or the full expense method where by you claim the cost of the van, fuel and other motor expenses.

Our client had the same dilemma and asked us to explore the options on their behalf, so should they be claiming for all fuel, servicing and other motor costs or for mileage. Before making this decision its always best to check which method is more tax efficient. It is also worth remembering that once a method is chosen for specific van it cannot be changed until a new vehicle is purchased, for example you cannot claim AIA with the mileage expense and vice versa.

In this case it so happened that the mileage method would have cost our client over £2000 more in tax through their self-assessment for the period. This shows the value of checking the figures before deciding on a tax method and the benefit of using an accountant to run through the figures for you. Our self-assessment tax returns cost £300 therefore our client gained over £1700 by letting us put through his self-assessment tax return.


£600 Tax saving

Value added tax planning
There are a number of schemes available for companies in Value added tax. In particular this case revolved around whether the client should adopt flat rate or standard. The client in particular wanted to adopt the Flat rate.
In order to forecast the two different costs involved with the schemes it was important to forecast future transactions for the next year. This is because Flat rate VAT works on a rate charged on sales invoices (taking into account the difference allowed in year 1) where as the standard scheme allows you to claim 20% of all allowable purchases against the 20% charged on sales invoices.
By forecasting the predicted sales and expenses we could compare the difference in Tax paid on both VAT schemes. This analysis showed the flat rate would cost around £50 more each month in tax paid against standard rate. This shows the importance of asking a qualified accountant to look at Tax schemes before you commit as it can cost you money if you don’t.
The result, the client was advised and adopted the standard VAT scheme which was predicted to save our client £600 throughout the year and allowing us to add value to their business.

£10,000 cost saving

Manufacturing Case Study – Added Value
One of Our Clients is a small Manufacturing company in Bedfordshire.
When we first started working with the client there was minimal ways of recording direct tooling costs. It was expected that the high cost of tooling was borne because of the material being machined.
We created for the client a Spreadsheet which recorded the number of tools used each period and multiplied this by the cost of each tool. This is then used against the number of parts produced for comparison. This spreadsheet was nothing special just a timeline of stock held in excel which tracks usage over each period.
This solved two issues:

  • Accounting requirements at Year end were kept up to date with accurate stock takes with costing which streamlined the process
  • Usage during the week can be tracked and put against how many parts were created.

The second part of the above was more useful as it showed the tooling would go up and down irrelative to the amount of parts created. For example sometimes production would go down in the week but tooling cost would go up.
By working with Elite we found some of the material should have been rejected due to hardness. We also found tooling was being scrapped too soon by employees. This resulted in training for the employees on tooling usage and an inspection of the material for hardness. The spreadsheet was then used to keep track of the future developments and to spot issues before they occur.
This small change saved the company 50% of their direct tooling costs and more than paid our accountancy fee each year. We added value to the business and that’s what we aim for when entering into relationships with clients.

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